Capital productivity records growth in SA


15 December 2021

Productivity SA, an entity of the Department of Employment and Labour (DEL), with a mandate to promote employment growth and productivity has released the 2021 National Productivity Statistics. Productivity is a key source of economic growth and competitiveness.

Productivity SA publishes Productivity Statistics on annual basis to promote the understanding of the current and historical developments in productivity. The Statistics are important in that they help Government, business, workers and the general public to assess the ability to efficiently combine production inputs to produce goods and services with the aim to contribute to the wellbeing of South Africans.

The Chief Economist at Productivity SA, Dr Leroi Raputsoane says “This report is released at a time when the economic growth in South Africa has decelerated sharply. 2020 marked the onset of the Covid-19 pandemic which severely affected global economies and financial markets, over and above the widespread public health crises. This led companies to halt capital investment and to cut down on employment, while idle time became rampant on travel restrictions in observance of social distancing”.

“We have seen labour productivity and Multifactor productivity which measure the efficiency of workers as well as innovation in the workplace, respectively, recording a significant decline in growth in 2020 while capital productivity, which measures the efficiency of the use of machinery and equipment recorded a considerable acceleration in growth during the same period”, continued Raputsoane.
According to Dr Raputsoane, these productivity trends mainly reflect the decline in creativity, or innovation, as the leading factor in the collapse of productivity, or efficiency, in the period.

Real output, excluding general government services as well as community and personal services, recorded a significant negative growth and declined to -8.8% in 2020 from -0.2% in 2019. An almost similar, albeit slightly less significant, negative growth was realised by real output, including general government services as well as community and personal services where the indicator declined to -6.8 % in 2020 from 0.2 % in 2019.

Real output of all main sectors that include the Primary, Secondary and Tertiary sectors realised a substantial decline in growth during 2020. The share of the Primary to Real output increased slightly in 2020, while the shares of the Secondary and Tertiary sectors to Real output realised a moderate decrease in the same period. The Tertiary sector remained the most important contributor to Real output while contributions of the Primary and Secondary sectors remained modest.

Capital productivity which shows how efficiently capital is used to generate output, accelerated considerably in 2020. The indicator previously recorded three years of successive positive growth between 2016 and 2018 and a weak negative growth in 2019.
In delivering the Productivity Statistics, Raputsoane highlighted that the relatively significant positive escalation in capital productivity was mainly due to the strong acceleration in growth of all the main sectors. In particular, the tertiary and Secondary sectors accelerated significantly while a notable positive increase was shown by the primary sector. Construction as well as wholesale, trade and catering realised a considerable decline in growth during 2020 while electricity, gas and water, finance, real estate, and business services as well as agriculture, forestry and fishing registered notable acceleration in growth during the same period.

On the extremes, electricity, gas, and water recorded a significant acceleration in growth during 2020 while Construction as well as Wholesale, trade, catering, and accommodation registered a considerable decline in growth during the same period. Labour productivity realised a relatively marginal decline in 2020. The indicator generally recorded negative growth on average between 2016 and 2020 saving the weak positive growth in 2017. A relatively significant negative growth in the indicator was registered in 2016. The decline in growth of Labour productivity in 2020 was supported by the negative growth registered by the Secondary and Tertiary sectors while the Primary sector accelerated slightly in the same period.

A significant negative growth in Labour productivity was realised in Mining and quarrying, Manufacturing, Transport, storage, and communication as well as Construction which recorded a substantial decline in growth during 2020 while the opposite is true with Agriculture, forestry, and fishing as well as Finance, real estate and business services which recorded strong acceleration in growth during the same period. On opposite spectrums, Mining and quarrying recorded a significant decline in growth during 2020 while the opposite is true for Agriculture, forestry and fishing which registered a strong acceleration in growth during the same period. Multifactor productivity registered a considerable decline in 2020.

The indicator previously recorded negative growth in 2018 and 2019 as well as in 2016 while it registered a positive growth in 2017. A relatively significant positive growth was realised in 2017 while the opposite is true in 2020. The considerable decline in Multifactor productivity was mainly driven by the relatively significant negative growth of all the sectors that comprise the Primary, Secondary and Tertiary sectors. In particular, the Primary and Secondary sectors declined considerably in 2020 while the Primary sector registered a relatively marginal negative growth in the same period. Transport, storage and communication, Electricity, gas, and water as well as construction registered considerable negative growth in 2020 while the opposite is true for Agriculture, forestry, and fishing. On the extremes, Multifactor productivity of Transport, storage and communication realised a substantial decline in growth while the opposite is true for Agriculture, forestry, and fishing.

The CEO of Productivity SA, Mothunye Mothiba said ” We believe that by measuring productivity and publishing the Productivity Statistics, we will assist Government and policymakers to understand the current and historical developments in productivity, which will assist in determining appropriate policy interventions in the economy to enhance productivity and competitiveness”.
“The report will also be helpful to enterprises as they track changes in business performance, production costs and the efficiency of production inputs as well as the labour federations to negotiate wages. “Most importantly, it is important to understand that productivity growth leads to higher incomes which results in an improvement in living standards of the country given that conventionally an increase in productivity should be matched by increase in wages” continued Mothiba.

In conclusion, the CEO of Productivity SA called upon all South Africans to embracing productivity, which requires the effective and efficient use of resources to achieve desired outcomes. The productivity should be instilled in the South African society to realise a positive change in the levels of prosperity.


ENDS
For more information, please contact the Productivity SA media liaison office, Maupi Monyemangene, on 011 848 5397/ 0824473232 or send an e mail: maupim@productivitysa.co.za.